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The short and longer term potential welfare impact of global commodity inflation in Tanzania

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  • Dessus, Sebastien

Abstract

This paper uses a computable general equilibrium model to assess the welfare impact of commodity price inflation in Tanzania and possible tax policy responses in the short, medium, and long term. The results suggest that global commodity inflation since 2006 may have had a significantly negative impact on all Tanzanian households. Most of the negative impact comes from the rise in the price of oil. In contrast, food price spikes are potentially welfare improving for all Tanzanian households in the medium to long run. In comparison with nonpoor households, poor households in Tanzania may be relatively shielded from global commodity inflation because they derive a larger share of their incomes from agricultural activity and consume less oil-intensive products. Finally, the results suggest that tax policies encouraging greater agricultural production and consumption may help to reduce poverty. In contrast, policies discouraging agricultural production (such as export bans) bear the risk of increasing poverty in the long run. However, such policies would only effect at the margin (in one direction or the other) the likely impact of global commodity inflation on poverty.

Suggested Citation

  • Dessus, Sebastien, 2008. "The short and longer term potential welfare impact of global commodity inflation in Tanzania," Policy Research Working Paper Series 4760, The World Bank.
    • Handle: RePEc:wbk:wbrwps:4760
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    References listed on IDEAS

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    1. Martin Ravallion, 1997. "Famines and Economics," Journal of Economic Literature, American Economic Association, vol. 35(3), pages 1205-1242, September.
    2. Sébastien Dessus & Santiago Herrera & Rafael De Hoyos, 2008. "The impact of food inflation on urban poverty and its monetary cost: some back‐of‐the‐envelope calculations," Agricultural Economics, International Association of Agricultural Economists, vol. 39(s1), pages 417-429, November.
    3. Wodon, Quentin & Tsimpo, Clarence & Backiny-Yetna, Prospere & Joseph, George & Adoho, Franck & Coulombe, Harold, 2008. "Potential impact of higher food prices on poverty : summary estimates for a dozen west and central African countries," Policy Research Working Paper Series 4745, The World Bank.
    4. Ivanic, Maros & Martin, Will, 2008. "Implications of higher global food prices for poverty in low-income countries," Policy Research Working Paper Series 4594, The World Bank.
    5. Mitchell, Donald, 2008. "A note on rising food prices," Policy Research Working Paper Series 4682, The World Bank.
    6. Thurlow, James & Wobst, Peter, 2003. "Poverty-focused social accounting matrices for Tanzania," TMD discussion papers 112, International Food Policy Research Institute (IFPRI).
    7. Aksoy , M. Ataman & Isik-Dikmelik, Aylin, 2008. "Are low food prices pro-poor ? net food buyers and sellers in low-income countries," Policy Research Working Paper Series 4642, The World Bank.
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    Cited by:

    1. Caroline Harper & Nicola Jones & Andy McKay, 2010. "Including Children in Policy Responses to Economic Crises," Working papers 1003, UNICEF,Division of Policy and Strategy.
    2. Sébastien Dessus & Santiago Herrera & Rafael De Hoyos, 2008. "The impact of food inflation on urban poverty and its monetary cost: some back‐of‐the‐envelope calculations," Agricultural Economics, International Association of Agricultural Economists, vol. 39(s1), pages 417-429, November.

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    Keywords

    Markets and Market Access; Economic Theory&Research; Emerging Markets; Currencies and Exchange Rates; Rural Poverty Reduction;
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